To put it simply, a code of conduct (sometimes referred to as a code of ethics) tells your employees how they are expected to behave. It articulates an organization’s mission, as well as its values and principles.

Your code of conduct should clearly outline what you believe as an organization and how each employee should treat each other, as well as the people they interact with as a representative of your business.

Aside from meeting legal requirements, establishing a code of conduct also helps to create a company culture and improve an organization’s reputation.

There are several reasons that your business should have a code of conduct, including:

Client focus—Ensure your employees know how you expect your customers to be treated.

You should also include items such as a letter from leadership and a table of contents at the beginning of the code of conduct. All of these are meant to give all employees, from the CEO to the new hire, a greater understanding of company values and expectations.

It’s important to be clear and concise when drafting your code of conduct. You want to make sure there’s no confusion. PepsiCo’s code of conduct, for example, gives exact dollar amounts for what is considered a gift and what isn’t.

Updating Your Code of Conduct

In 2014, 93 percent of companies in the U.S. had a code of conduct but less than half did a good job of updating it, according to a briefing from the Institute of Business Ethics. Always remember to update your code of conduct as things change over time. As your company grows and changes, so too should your code of conduct.